Wagoner v. NPAS, Inc.

• Decision Date: 27 April 2020
• Docket Number: CAUSE NO. 3:18-CV-520 DRL-MGG
• Citation: 456 F.Supp.3d 1030
• Parties: Katie WAGONER, Plaintiff, v. NPAS, INC., Defendant.
• Court: U.S. District Court — Northern District of Indiana

456 F.Supp.3d 1030

Katie WAGONER, Plaintiff,

v.NPAS, INC., Defendant.

CAUSE NO. 3:18-CV-520 DRL-MGG

United States District Court, N.D. Indiana, South Bend Division.

Signed April 27, 2020

Geoffrey B. McCarrell, David S. Klain, Samuel L. Eirinberg, Melanie D. Pennycuff, Consumer Law Partners LLC, Chicago, IL, for Plaintiff.

Jamie N. Cotter, PHV, Pro Hac Vice, Spencer Fane LLP, Denver, CO, Megan D. Meadows, PHV, Pro Hac Vice, Spencer Fane LLP, Saint Louis, MO, Theresa R. Parish, Ogletree Deakins Nash Smoak & Stewart PC, Indianapolis, IN, for Defendant.

OPINION & ORDER

Damon R. Leichty, Judge After Saint Joseph Regional Medical Center treated Katie Wagoner three times and her child once, the hospital adjusted her debts for any applicable insurance and sent the account balances to an early-out healthcare billing company, NPAS, Inc., to service payment. NPAS sent her several billing statements. She now sues under the Fair Debt Collection Practices Act—a federal statute that authorizes private suits for unlawful collection practices—but this law applies only to debt collectors. The accounts here weren't in default when NPAS obtained them, so the company wasn't acting as a debt collector. Accordingly, the court grants summary judgment for NPAS.

BACKGROUND

Katie Wagoner received medical treatment at SJRMC in Mishawaka, Indiana on April 18, 2017 (Account 1), June 14, 2017 (Accounts 2 and 3), and December 5, 2017 (Account 4). ECF 37-1, 41-3. Ms. Wagoner was treated on all three dates and her minor child was treated once on June 14, resulting in a total of four accounts guaranteed by Ms. Wagoner.

Upon each hospital admission, Ms. Wagoner signed a patient contract with SJRMC, which states: "I agree to pay my account in full upon discharge from the Medical Center unless other arrangements are made in advance." ECF 37-1. On each occasion, Ms. Wagoner was discharged from SJRMC on the same day as admission. ECF 37-2 at 18, 32, 48, 61. Ms. Wagoner's accounts were then submitted to her insurance company for payment. Id. After any applicable insurance payments or adjustments, the accounts were left with unpaid balances ranging from $5.80 to $536.28. Id.

SJRMC sent the accounts to NPAS for billing and servicing within 30-64 days after the dates of service and discharge. Id. at 21, 34, 49, 62.¹ NPAS sent Ms. Wagoner two statements per account. Id. at 25-29, 33-34, 38-42, 53-57, 67-71. All statements said NPAS "is a company that is managing your account for the healthcare provider." Id. The statements also indicated where the services were provided (SJRMC). Id. The second statement for each account cautioned Ms. Wagoner that "if payment in full is not received, your account may be referred to a debt collector without further notice." Id. at 28, 41, 56, 70. None of the accounts were charged interest before or during the time they were placed with NPAS. Id. at 21, 25-29, 38-42, 48-49, 53-57, 61-62, 67-71.

NPAS is as an "early-out" service for healthcare systems and independent hospitals. Id. at 2. NPAS bills and attempts to resolve balances on unpaid accounts before the account is deemed delinquent. Id. According to the Master Service Agreement (MSA) between NPAS and Trinity Health Corporation (SJRMC's corporate parent), NPAS functions as "an extension of [ ] Trinity's business office[.]" ECF 39 ¶ 9.8. In particular, the MSA provides:

Trinity understands and agrees that [NPAS] is in the business of servicing accounts that are not in default when [NPAS] takes responsibility for the accounts, and that [NPAS] cannot render services to Trinity on Defaulted Accounts. "Defaulted Accounts" means accounts that are considered to be "in default" according to any agreement between the Affiliate [SJRMC] and the patient or payor, and applicable law, as implemented by the Affiliate's policies, procedures or guidelines.... Affiliate will not place with, transmit to, assign, or otherwise provide to [NPAS] for servicing any Defaulted Accounts ....

Id. Typically, an early-out billing company will assist with servicing a debt for a certain period of time, and then turn the account back to the hospital to determine whether to default the account and procure the services of a debt collector. This arrangement was no different. See id. ¶¶ 4.1, 5.1, 9.3 (amended), 9.8, 11.15.

Ms. Wagoner filed this lawsuit against NPAS seeking damages for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA), and the Indiana Deceptive Consumer Sales Act, Ind. Code 24-5-0.5-1 et seq. (IDCSA). Ms. Wagoner claims NPAS didn't disclose information required by law. 15 U.S.C. §§ 1692e(11), 1692g(a)(3)-(5). NPAS says it wasn't a debt collector and wasn't then subject to the FDCPA because Ms. Wagoner's accounts weren't in default at the time the company acquired them. Ms. Wagoner says the debts were in default at that time, thereby making NPAS a debt collector. The parties filed crossmotions for summary judgment on this sole issue.

STANDARD

Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The non-moving party must present the court with evidence on which a reasonable jury could rely to find in his favor. Goodman v. Nat'l Sec. Agency, Inc. , 621 F.3d 651, 654 (7th Cir. 2010). The court must deny a summary judgment motion when there is admissible evidence that creates a genuine issue of material fact—a triable issue. Luster v. Ill. Dept. of Corrs. , 652 F.3d 726, 731 (7th Cir. 2011).

The court "is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe." Waldridge v. Am. Hoechst Corp. , 24 F.3d 918, 920 (7th Cir. 1994). Instead, the "court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Id. The court must construe all facts in the light most favorable to the non-moving party, view all reasonable inferences in that party's favor, Bellaver v. Quanex Corp. , 200 F.3d 485, 491-92 (7th Cir. 2000), and avoid "the temptation to decide which party's version of the facts is more likely true," Payne v. Pauley , 337 F.3d 767, 770 (7th Cir. 2003). The factual record here isn't materially in dispute.

DISCUSSION

A. NPAS Wasn't a Debt Collector for these Debts under the Fair Debt Collection Practices Act.

"Disruptive dinnertime calls, downright deceit, and more besides drew [an] eye to the debt collection industry. From that scrutiny emerged the Fair Debt Collection Practices Act, a statute that authorizes private lawsuits and weighty fines to deter wayward collection practices." Henson v. Santander Consumer USA Inc. , ––– U.S. ––––, 137 S. Ct. 1718, 1720, 198 L.Ed.2d 177 (2017). Congress designed the FDCPA "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e).

To establish an FDCPA violation, Ms. Wagoner must show that (1) NPAS qualified as a "debt collector" under 15 U.S.C. § 1692a(6), (2) NPAS violated one or more substantive provisions of the statute, and (3) NPAS took its violative actions in connection with collecting a debt. See Gburek v. Litton Loan Servicing LP , 614 F.3d 380, 384 (7th Cir. 2010). Ms. Wagoner says NPAS violated 15 U.S.C. §§ 1692e(11) and 1692g(a)(3)-(5) by not making various disclosures (e.g. , NPAS didn't say it was a debt collector). NPAS argues that it was not a debt collector subject to this federal law.

The court starts with the statutory text. The statute distinguishes between creditors and third-party debt collectors. See Aubert v. Am. Gen. Fin., Inc. , 137 F.3d 976, 978 (7th Cir. 1998). A creditor who collects in its own name and whose principal business is not debt collection is not subject to the act (e.g. , the hospital here). Id. In contrast, a debt collector is a person collecting a "debt owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Congress intended to distinguish between "[c]reditors, who generally are restrained by the desire to protect their good will when collecting past due accounts," and "debt collectors, who may have no future contact with the consumer and often are unconcerned with the consumer's opinion of them." Schlosser v. Fairbanks Cap. Corp. , 323 F.3d 534, 536 (7th Cir. 2003) (quoting S. Rep. No. 95-382 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1696) (quotations omitted).

The statute gives and takes away. From the general definition of debt collector, the statute exempts certain actors. See 15 U.S.C. §§ 1692a(6)(A-F). The pertinent provision here excludes:

any person collecting any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person[.]

15 U.S.C. § 1692a(6)(F)(iii). It follows that where the original creditor assigns or otherwise places the debt with another for collection, the law treats the recipient as a "debt collector[ ] if the debt sought to be collected was in default when acquired by the assignee, and as [a] creditor[ ] if it was not." Schlosser , 323 F.3d at 536. The designations of creditor and debt collector thus often remain mutually exclusive. Id. ; cf. Henson , 137 S. Ct. at 1724 (assuming without granting this premise).

NPAS serves as an "early-out" collector and extended business office for healthcare systems. A company hired to service the debt of another—i.e. , send bills and collect routine payments—falls under the "creditor" category so long as the debt wasn't in default at the time it obtained the account. See Schlosser , 323 F.3d at 536 ; Magee v. AllianceOne, Ltd. , 487 F. Supp.2d 1024, 1028 (S.D. Ind. 2007) (Lawrence,...